India remains world's top recipient of remittances

For the fourth straight year, India has narrowly edged out China to emerge as the world’s top recipient of officially recorded remittances. According to the latest issue of the World Bank’s Migration and Development Brief released on Wednesday and containing estimates for 2011 remittances, India is expected to receive $58 billion this year, followed by $57 billion flowing to China, and $24 billion to Mexico.

Worldwide remittances, including those to high-income countries, will reach $406 billion in 2011, of which $351 billion will flow into developing countries. “Despite the global economic crisis that has impacted private capital flows, remittance flows to developing countries have remained resilient, posting an estimated growth of eight per cent in 2011,” said Hans Timmer, Director of the Bank’s Development Prospects Group, in a release sent by the World Bank. “Remittance flows to all developing regions have grown this year, for the first time since the financial crisis.”

Remittance flows to South Asia grew by a faster-than-expected 10 per cent, while the Middle East and North Africa saw the slowest growth rate among developing regions, of 2.6 per cent, due to unrest related to the Arab Spring. The bank expects continued growth in global remittance flows in the coming years, of 7.3 per cent in 2012, 7.9 per cent in 2013 and 8.4 per cent in 2014.

According to the brief, high oil prices helped provide a cushion for remittances to South Asia from the Gulf Cooperation Council or GCC countries this year. A depreciation of currencies in large migrant-exporting countries like India, Bangladesh and Mexico also contributed to the rise in remittances.

However, the report noted that persistent unemployment in Europe and the United States was affecting employment prospects of existing migrants and hardening political attitudes toward new immigration in those regions.

The bank says remittance flows would benefit if the global community achieves the “5 by 5” objective agreed to by the G8 and G20 nations, of reducing global average remittance costs by 5 percentage points in 5 years. Remittance costs have fallen steadily from 8.8 per cent in 2008 to 7.3 percent in the third quarter of 2011 due to increasing competition in large volume remittance corridors such as UAE-India.

India’s inward remittances have grown from $13 billion in 2000 to $58 billion this year, while remittances to China have jumped from $5 billion to $57 billion during the same period. The share of remittances in China’s GDP is just under one per cent, while the inflows made up three per cent of India’s GDP last year.

Other large recipients of remittances this year include the Philippines, Bangladesh, Pakistan, Nigeria, Vietnam and Egypt.